The Employee Retention Credit passed in 2020 as a way to help businesses survive the pandemic. In 2021, it was amended and renewed.
While the ERC is no longer actively in effect, some businesses can apply for their ERC retroactively. The problem is that when you head to the IRS website, there are dozens of forms and paperwork to sift through.
How do you know if you have ERC eligibility? What can you do to make the process of filing for your ERC easier?
Read on to learn about ERC eligibility and more.
What Is the Employee Retention Credit?
In 2020, thousands of businesses had to shut their doors to stop the spread of COVID-19. As a result, the government developed the CARES Act, which included the Employee Retention Credit.
The ERC provides financial support to businesses that chose to keep employees on the books despite having to shut down. It was then renewed and amended in 2021, allowing businesses to claim an even higher tax credit than before. Qualified businesses can now receive up to $10,000 in tax credits per qualified employee per quarter.
Who Has ERC Eligibility?
Most industries are eligible for the ERC, including those that were once excluded because they were considered essential. This includes hospitals, schools, and 501(c)(3) organizations. However, that doesn’t mean that all businesses that fall under these categories are eligible for the ERC.
In order to claim the ERC, you must establish that you meet either of these ERC requirements:
- your business was shut down or significantly limited by a government edict during the COVID-19 pandemic
- your gross receipts have dropped a significant amount
The ERC only applies to the quarter(s) in which one or both of these conditions were present. How much your business may receive in tax credits will depend on a variety of factors including the number of employees you have and their wages.
How Can You File for Your ERC?
Filing for and tracking the status of the ERC isn’t easy. Now that businesses are applying for retroactive tax credits, it has become even more complicated to verify that you are eligible.
That’s why there are now ERC specialists guiding businesses through the process. The IRS is notorious for being difficult to get on the phone, which means that your best bet is to turn to ERC experts to file and track your employee retention credit.
Don’t Lose Out on This Important Tax Credit
If you continued to keep employees on the books even when you were forced to bring your business to a halt, you are entitled to financial support. You can still file for the employee retention credit in 2023, so don’t miss out on this important opportunity. Work with professionals for a smooth and stress-free ERC filing process.
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